What is performance management?

Performance management is a process by which managers and employees work together to plan, monitor, and review an employee’s work objectives and overall contribution to the organization, including its operational and strategic performance.

More than just an annual performance review, performance management is the process of setting objectives, continuously assessing progress, and providing on-going coaching, feedback and support to ensure that employees are meeting their performance objectives and professional development goals.

Performance management is often based on a combination of goals, objectives, and competencies that an organization has developed for each position and/or level. Competencies are usually aligned with organizational values, and include knowledge, skills, abilities, and attributes.

Examples of competencies include:

  • Collaboration
  • Communication
  • Diversity and social inclusion
  • Project management
  • Team management

The legal requirement for performance management

While establishing a performance management policy and procedure is not a legal requirement, human rights legislation requires employers to treat employees equitably and fairly, without discrimination. A well-designed, documented, and implemented performance management policy and process can serve to ensure and demonstrate objective and fair decision-making regarding compensation, promotion, disciplinary action, and termination.

What does a performance management system do?

An effective performance management system should:

  • Be based on well-written job descriptions, job-related and/or role-related activities, and competencies.
  • Be practical and easy to understand and use.
  • Provide an accurate picture of each employee’s performance.
  • Include a collaborative process for setting goals and reviewing performance based on two-way communication between the employee and manager.
  • Monitor and measure results (what) and behaviours (how).
  • Include positive feedback for a job well done and constructive feedback when improvement is necessary.
  • Identify training and development opportunities for improving performance or career progression.
  • Ensure that employee work plans support and align with the strategic direction of the organization, providing the employee with a sense of purpose and connection to the organization's overall mission.
  • Establish clear, ongoing communication between managers and employees about what employees are expected to accomplish and what barriers or obstacles may be getting in the way.
  • Identify and recognize employee accomplishments related to achieving their goals and objectives as well as those actions that go above and beyond the employee’s duties.
  • Support or inform decisions about promotions, compensation, rewards, and terminations (as applicable).
  • Provide documentation to demonstrate due diligence for legal challenges related to dismissal.

As organizations are adapting to new opportunities and pressures for remote and/or hybrid work, it's important to remember that what worked in the past, when teams mainly worked together, may not work in the new reality.

A few guidelines to consider when creating or updating your performance management policy and process are:

  • Clearly outline business priorities and tie them to individual goals
  • Check-in with employees not only to discuss work and performance but also to discuss overall well-being. Be intentional when scheduling check-ins do so regularly but keep flexibility to allow for changes to accommodate employees’ commitments
  • Focus on results — not on time spent

Human resources software companies provide a range of tools that could be useful when conducting performance management in a remote or hybrid environment, such as instant praise for work well done delivered through messaging apps, nudges, or fully online performance management modules.

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